Committee Report: Annual Efficiency Statement – Mid year 2006/07
Report to: |
Cabinet |
|---|---|
Date: |
16th November 2006 |
Subject: |
Annual Efficiency Statement – Mid year 2006/07 |
Report of: |
Director of Finance & IT |
Contact officer: |
Ian Kell - 2238 |
Purpose / summary: |
To present the Mid Year Annual Efficiency Statement (AES) for 2006/07 for comment and approval before submission to the DCLG |
Alternative options considered and reason for selecting the one recommended: |
Not to submit the statement. See para 9. |
Recommendation / decision: |
Approve the Mid year AES for 2006/07 and submit to the DCLG |
Key Decision: |
This report does not involve a key decision. |
Implications: |
|
Financial: |
The Mid Year AES forecasts in year efficiency savings of £9.5 million to 30 th September. The Forward look for 2006/07 has been revised down to £14.8 million. (see para 7) |
Staffing: |
Efficiency savings may result in reduced staffing levels as part of planned service and departmental reconfiguration. There is also an emphasis on investment in training and skill development. |
Policy: |
|
Equal Opportunities - Has a Diversity Impact Assessment been conducted? |
Efficiencies will enable better targeting of our customers with specific needs. |
Wards affected: |
The Gershon efficiency agenda has the potential to improve service delivery across the Borough. |
Special Interest Members – Which have been consulted |
|
Tracking/Process:
|
Consultation |
Ward Members |
Partners |
|---|---|---|---|
|
Chief Officers |
- |
- |
Panel |
Overview & Scrutiny |
Cabinet |
Council |
- |
- |
16 th November 2006 |
- |
There are no Background Papers to this Report within the meaning of Section 100D of the Local Government Act 1972.
Proper Officer |
David J. Smith |
|---|---|
Date |
15 November 2006 |
Introduction
1. The Council is required to submit Annual Efficiency Statements (AES) to demonstrate compliance with the targets set by the Government. Statements are both forward and backward looking with an additional mid-year progress report. Previously we have submitted a forward looking statement for 2005/06 (April 2005), 2006/07 (April 2006), a mid year statement for 2005/06 (November 2005) and backward looking statements for 2004/05 (June 2005) and 2005/06 (July 2006).
2. This report deals with the Mid Year AES for 2006/07 which must be submitted by 17 th November (attached at Appendix ‘A’).
3. All Councils are required to achieve efficiency savings equivalent to 2.5% of defined expenditure in the base year 2004/05. At least 50% of these savings must be cashable – capable of being released to improve services or, if Councils decide, to reduce Council Tax.
4. There is no explicit requirement at the moment to use efficiency savings to reduce net expenditure – guidance makes clear that the agenda is not about expenditure reductions. Effectively the Council has taken advantage of many of the efficiency savings identified in the budget strategy either by reducing the net expenditure requirement or reprioritising spending through the budget options and growth bid process. Equally the capital expenditure programme, particularly for the Housing Revenue Account, is based on the negotiated contract prices which have yielded the efficiency savings submitted.
5. It should also be noted that the efficiencies gained from the Housing Improvement capital programme in terms of competitive tenders and holding down prices have contributed significantly to our total savings. This will present a challenge for 2007/08 when the capital programme reduces significantly.
The Mid Year AES results
6. The process of preparing this AES has been managed by the Corporate Delivery Team with each Department contributing calculated efficiencies and comments on strategies and key actions for 2006/07.
7. The targets for 2006/07 have changed since we submitted the Forward Look in March. The table below summarises the main changes:
|
Comments |
£m |
|---|---|---|
Forward Look AES March 2006 |
|
16.5 |
Revised Forward Look 2006/07 |
14.8 |
|
Reduction |
|
-1.7 |
Analysis of major changes |
||
Reduction in Housing Capital Expenditure Efficiency gain |
Revised inflation index to measure gains |
-2.3 |
Net improvements from 2005/06 backward look and additional efficiencies identified in mid year review |
Changes across all activity areas |
0.6 |
8. With the improvement in 2005/06 and some further efficiencies in 2006/07 the Council should still achieve the target of £14.651 million for 2006/07. The mid year achievement has been assessed at £9.5 million. The cumulative position which takes into account the ongoing savings from 2004/05 & 2005/06 remains comfortably ahead of target. However Cabinet are reminded that we are required to identify a further 2.5% saving, equivalent to £7.326 million, in 2007/08 of which 50% must be cashable. There is a close similarity therefore between the cashable efficiency savings target and the budget options which you have asked to be exemplified.
Alternative options considered and reason for the recommended option:
9. As an excellent authority under the CPA assessment we are not required to submit the Mid Year Statement. However I believe that the preparation of the Statement demonstrates that the monitoring of efficiency gains is embedded into our processes and that the consequent submission of the statement to the DCLG is strong evidence of the Council’s commitment to the efficiency agenda.
Strategic Context of the AES
10. I have previously advised Members that the efficiency agenda underpins the Government’s approach to determining the macro funding requirement for all public services. Recent statements from the Government, and in particular the Treasury, are clear that the continuation of this agenda through the next Comprehensive Review (2008 to 2011) is a key factor. Indeed such statements now talk openly about the ability of this agenda to contribute to lower levels of overall taxation.
Conclusions
11. The report is brought to Cabinet for information and for additional comments on the strategy and key actions stated.
12. The statement must be formally approved by the Leader, Chief Executive and Director of Finance and such approval evidenced.
13. The AES must be submitted by 17 th November. Colleagues have been asked to ensure that the savings submitted are supported by factual evidence and that the comments on strategy and key actions properly reflect their views. It may therefore be necessary to make changes to the AES before submission tomorrow. Whilst I do not expect these to be material I will update the Cabinet at its meeting of any changes of significance.
Recommendation
14. The Cabinet is asked to approve the AES and authorise the Director of Finance and IT to make any final amendments, reporting these to the Leader and Chief Executive.
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